Rand softens as dollar firms on higher US wages

FILE: The rand surged to a four-week best level against the dollar on Thursday as the greenback fell against a basket of major currencies‚ triggered by ambiguous signals from the minutes of the federal open market committee’s December meeting. Photo: Reuters / Mike Hutchings

JOHANNESBURG - The rand was weaker on Friday afternoon as the dollar strengthened after data showed that average wages in the US saw a significant jump in 2016.

The wage increase saw the dollar strengthen as it heightens the likelihood of further interest-rate rises in the world’s largest economy this year.

At 3.42pm the rand was at R13.6516 to the dollar from R13.5792‚ trading in a range of between R13.56 and R13.69. It was at R14.4324 to the euro from R14.4026 and at R16.8678 to the pound from R16.8631.

The euro was at $1‚0572 from $1‚0606.

Nonfarm jobs in the US grew by 156‚000 in December from an expected 183‚000. That brought the annual total to just below 2.2-million‚ the lowest increase since 2011.

The unemployment rate was marginally higher‚ at 4.7%‚ but still well below the 10% peak in October 2009.

Americans in private-sector nonfarm jobs earned an average $26 an hour in December‚ up $0.10‚ or 0.39% from the prior month.

Wages climbed 2.9% over the past year‚ the strongest growth since June 2009. This could be an indication of rising inflationary pressures in the US economy‚ which would support higher interest rates.

Bucking the recent trend of consistently moderating the timing and extent of its expected interest rate increases‚ the US Federal Reserve had finally increased its rate forecasts‚ Momentum Investment analysts said.

“Fed forecasts now show that it could raise the Fed funds rate three times this year‚” Momentum said.

The rand surged to a four-week best level against the dollar on Thursday as the greenback fell against a basket of major currencies‚ triggered by ambiguous signals from the minutes of the federal open market committee’s December meeting. However‚ some short-covering saw the US unit staging a comeback on Friday ahead of the release of the jobs numbers

iNet Bridge

Discussion Policy

eNCA.com would like to send you push notifications.
Notifications can be turned off any time in your browser settings.
You have been registered for browser notifications